Incentives like mortgage buydowns and price cuts on homes are out there.
Aspiring homeowners put off by current mortgage rates can still find newly built homes that come with a 4% mortgage rate, one real-estate expert says.
With so many buyers priced out of the market, demand has fallen and existing-home sales have cratered. The pace of home sales for 2023 is expected to be the lowest since 2008, during the Great Recession. Home builders are paying points for home shoppers to reduce their mortgage rate and their monthly payments to make buying more affordable.
Consider Lennar’s LEN, +3.42% effort to drum up sales: In Austin, Texas, in early November, the builder was offering a rate as low as 4.99% on a 30-year Federal Housing Administration home loan for buyers who get financing from the builder’s affiliated mortgage company, Lennar Mortgage. In Orlando, Fla., the company was offering an adjustable-rate mortgage with a rate as low as 3.99% in the first year. After that, the mortgage adjusts to the prevailing rate, which could be as high as over 7%.
Burns said that he heard more chatter about price cuts in a recent survey of hundreds of home builders. “And this was the first month in a long time where more builders told us we’re actually dropping prices too,” Burns said, and that’s on top of rate buydowns.
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